Stocks advance as Apple bounces

The broader market closed modestly higher Tuesday, but Apple, J.C. Penney and airline stocks were the big stories of the day.

Apple shares were the second best performing in the S&P 500 after activist investor Carl Icahn took to Twitter to announce that he has a "large position" in the company and believes it to be "extremely undervalued."

Icahn said he had a "nice conversation" with Apple(AAPL) CEO Tim Cook earlier Tuesday and that they discussed his opinion that a "a larger buyback should be done now."

The announcement quickly made Apple the hottest topic among trader on StockTwits.

m3NYtrader:$AAPL Looks like Cook found a way to solve the share price problem - iCahn Bullish

J.C. Penney was in the spotlight after Bill Ackman resigned from the retailer's board. Ackman has been demanding the ouster of CEO Myron Ullman and chairman Thomas Engibous.

In its statement, Penney's board reiterated its "overwhelming support" for the two leaders. Shares of J.C. Penney(JCP) initially rose on the news but quickly fell into the red. The stock finished down nearly 4%, making it the second biggest losers in the S&P 500.

Ackman's departure was the also a big topic on StockTwits, but there was little agreement on how the hedge fund manager's exit will impact the future of J.C. Penney.

traderrick1: With Ichan up in Bill`s face, he`s making huge mistakes and effecting his investment strategy in regards to $JCP.

BlackHawkTrader: Just cause Ackman is off the board, it doesn't change my view on $JCP ( garbage store), never been in 1 and dont know anyone who shops there.

Meanwhile, airline stocks were big losers after the Justice Department filed a lawsuit to block the $11 billion merger between American Airlines and U.S. Airways(LCC), arguing that it would lead to higher fares for consumers. Shares of American Airline's bankrupt parent company AMR Corp.(AAMRQ) plunged more than 45% while U.S. Airways shares also tumbled.

Fed reiterates caution: Investors also tuned into comments from Atlanta Fed President Dennis Lockhart, who stressed that the Federal Reserve's decision to scale back its $85 billion per month bond purchase program will depend on economic data.

Lockhart said he does not expect to have enough data by September to be sure of his outlook, but added that whenever the Fed makes a decision, it "ought to be thought of as a cautious first step."

What's moving: In addition to Apple, Penney and airline shares, a few other stocks were on the move and getting plenty of attention on StockTwits.

Eli Lilly(LLY) shares rose after the company said its experimental lung cancer drug increased the survival rate of patients in a late-stage trial.

34angstroms: time to get away from erectile dysfunction, testosterone and antidepressants and move towards curing cancer #Necitumumab

Shares of Yum! Brands(YUM) dropped after the restaurant operator said same-store sales at its KFC locations in China dropped 13% versus last year as the company continues to struggle in the wake of a food safety scandal.

nnngggggg: $YUM people foolishly just assume this will do well china problem is getting worse not better. Bearish